Brakes put on Trade Me's motor purchase

The Commerce Commission has blocked Trade Me's bid to buy rival auto marketplace Motorcentral because it says it could undermine competition.

9 March 2018

The Commerce Commission has rejected online auction site Trade Me's purchase of rival auto marketplace Motorcentral, saying it couldn't rule out the tie-up undermining competition in the market.

The antitrust regulator turned down Trade Me's clearance to acquire Christchurch-based Limelight Software after almost eight months of reviewing the application.

Trade Me wanted to run Limeight's Motorcentral as a standalone business, while also letting dealers upload their listings to a range of websites including Autotrader, Driven, and Trade Me Motors.

The merger would combine Trade Me and Motorcentral, which is the largest provider of DMS (dealer management software) products to independent motor vehicle dealers, commission chairman Mark Berry.

"We could not exclude the real chance that this could result in a substantial lessening of competition in these markets, including deterring new entry."

Trade Me's application to buy Limelight attracted opposition from several submitters, including Autotrader owner Bauer Media, and the commission told the company it wasn't inclined to approve the deal in a letter of unresolved issues sent in December.

Mr Berry said the regulator was concerned a merger would create barriers for dealers who don't use Motorcentral's software and restrict them from using rival classified advertising websites. It could also limit the ability of new entrants to the market, he said.

Trade Me Motors head Alan Clark says he is disappointed with the decision, but will wait for the full reasoning to be released before deciding on whether to appeal.

"We'll also explore how we can work with Motorcentral to deliver some of the benefits we planned to our mutual customers."

Trade Me's shares closed at $4.33 on Thursday and have dropped 19 per cent over the past 12 months.